Q&A

Ford's Hinrichs wants better quality, smooth launches

Hinrichs: "Fuel economy is still very important."
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Joe Hinrichs, Ford Motor Co.'s president of the Americas, is a young man with a big load on his shoulders. Ford is launching 16 new vehicles in North America this year, which Ford says is the busiest and most ambitious launch schedule in its history.

As a guy who grew up in Ford's manufacturing system, Hinrichs has made it his job to make sure Ford improves its recently spotty launch record and restores Ford's quality numbers to what he believes is their rightful place near the top of the pack.

Hinrichs, 47, recently sat down with Dave Versical, director of editorial operations; Dave Guilford, news editor; Bradford Wernle, staff reporter; and Tom Worobec, editor of Automotive News TV.

Q: Alan Mulally is leaving Ford July 1 and will be replaced as CEO by Mark Fields. What kind of partnership do you see yourself forming with Mark?

A: Because Mark had this job for seven years, he understands what it's like to sit in this role and the importance this position has to the company overall. I think our relationship will just grow. We've been at that table with Alan for seven years together, so I don't think much will change at all.

One of Ford's biggest launches ever will be the 2015 aluminum F-150 pickup. What are the challenges?

We've been testing the process and the equipment for self-riveting and bonding at our pilot plant and in our manufacturing plant for over a year. We feel really good about the development of the manufacturing process side of this. We haven't converted the body shop yet. That happens late this summer, and that's a big deal.

This is a big undertaking for the aluminum supply base. That is perhaps underrepresented in the discussion.

Why did Ford change from steel to aluminum on the new truck? Was it all because of fuel economy?

People get focused on the weight savings and the fuel efficiency. But actually the idea for the aluminum and weight savings started with a discussion amongst the program team on how to make the truck more capable.

If you take up to 700 pounds of weight out, all that weight reduction could be transferred to more capability. For example, if nothing else changed, you could haul 700 more pounds. But also if you have the same braking system and the vehicle weighs 700 pounds less, we can stop the truck more quickly. Your transmission doesn't have to work as hard if it's not carrying 700 more pounds of weight around. Towing and payload and stopping distance -- these are all important to people who have a truck.

Is fuel economy as important a purchase factor as it was a couple of years ago? Will customers pay more for that last increment of mpg?

The research we've done shows fuel economy is still very important -- sometimes one, two or three on the consideration list for all buyers. What we've seen over the last couple of years is consumers are less likely to settle for a body size or a style they didn't want for fuel economy reasons.

Hybrids and electric vehicles seem to have cooled off. What's happening there?

Electrified vehicles have not grown -- plug-in hybrid and battery electric have not grown as a share of the industry anytime recently. Again, what we're seeing in the research is people have settled in, and gas prices have been pretty stable. Several years ago, people had more expectations of ever-rising gas prices.

Ford has invested heavily in an electrified-vehicle r&d center. Will you keep investing?

In April we were about 16 percent of the electrified industry in the U.S., so we're a distant No. 2 from a share standpoint.

It's a good business for us and an important business. We want to continue to maintain that business relative to others. Also it's an important part of the one national standard [54.5 mpg by the 2025 model year].

As the corporate average fuel economy standard goes up to 54.5 mpg, is there a certain ceiling for what you can do with efficient internal combustion engines? Will automakers need more electrification?

To get to the numbers that are in the one national standard, there needs to be a higher percentage of electrified vehicle sales in the U.S. It's roughly 3 percent right now.

CAFE has a provision for a midterm review in 2017-18. Do you think it should be reviewed and modified? Do you think there will be a movement to lessen the goal for 2025?

The midterm review was put in place because we needed to have a checkpoint on both technology capability and also what's happening in the economic environment and consumer behavior. All those factors need to be taken into consideration.

We're looking forward to the midterm review discussion with data. What we are seeing is, as a percentage of industry sales, we're not seeing the kind of growth in electrified vehicles that we expected when we had the one national standard conversation.

Ford has seen its quality ratings stumble in Consumer Reports and other public measurements, some of it to do with the MyFord Touch infotainment system. What has Ford been doing to solve the quality issues?

It's no secret that when we launched MyFord Touch we had some issues to work out in the first couple of years of the launch. With Microsoft's help, the team has over the last year been working really hard on improving the "things gone wrong" issues of the system. The latest data we've seen on surveys is that our system is performing better than the industry average on infotainment systems. We want to be again the leader, so we're working hard to make that happen.

How about overall quality?

The J.D. Power [Initial Quality Study] doesn't come out until the summer. Our data says that what we're producing today, from a warranty, from an issues standpoint, is the best we've ever produced in North America.

It's very important because back in 2006-2007, having been on this journey before here in North America, [we learned] the thing you can influence the most quickly is the quality of the products coming out of your manufacturing plants today.

Measured by what?

Warranty measured not just by costs, but incidence rates and repairs and stuff like that. We track that stuff daily.

That's important because if you go back to the 2006-2007 time frame when we made all that progress here in North America, that was our leading indicator. Clearly the launches this year will go a long way toward the next step in that progress.

At the same time, that is largely an internal measure, and you've got J.D. Power's IQS that gets splashed across the headlines. Consumer Reports earlier this year said Ford is "a sad story."

Consumer Reports specifically commented that on our new vehicles the ride, the handling, the driving dynamics were very good.

Their main issue has been MyFord Touch. They have it in the reliability section of the report and [that's] why we spend so much time talking about MyFord Touch. It's the dominant issue in the comments from Consumer Reports.

What is one thing you have learned from Alan Mulally?

One of the things that was most impactful about working with Alan is his positive energy and positive leadership. Even in the darkest days of 2008-2009, Alan would come in, and he would smile and say, "Man, this is awful -- and we get to work on it!" His positive optimism is infectious.

You can reach Bradford Wernle at bwernle@crain.com.


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